Irregardless I choose to answer them for the good of society as a whole.

I see bad_luck had a response. Sorry, b, you were blocked when the only thing that seemed to come out of your keyboard were references to someone else's body parts, so I didn't notice you responded to a post of mine...

I guess they aren't really rhetorical. I just was curious about how most people view economic cycles....

Are recessions always bad for the economy? (I'm not talking about whether they're bad for individuals - up and down cycles can be good and bad for both - I'm talking about the economy in general).

You mean like how forest fires can be a necessary thing for forests to survive? I don't think so. Downturns set the economy back. They can produce downward spirals that encourage behavior that is both rational and harmful to the economy at the same time.

Should the government do all it can to minimize any down cycles? (If you were in the Soviet Union in the 20th century, you'd need to be very careful with your answer).

Wow, MikeT23 actually said something I agree with (did I really just say that?).

That's why the economy is cyclical. It goes back and forth much like a rubber band when you stretch it. The major questions are always how far does it go in one direction and how long does it take to rebound the other way when it finally does.

Posted by dahsdebater on 12/11/2012 2:55:00 PM (view original):I don't think that's true... Constant economic growth at the rate we had in the '90s is probably unsustainable. Constant growth doesn't have to be.

Unless you've got some bisz-like theory that you can't explain because the rest of us just wouldn't understand, I'd argue that it is. Simply because it has never been sustained.

Are recessions always bad for the economy? (I'm not talking about whether they're bad for individuals - up and down cycles can be good and bad for both - I'm talking about the economy in general).

Should the government do all it can to minimize any down cycles? (If you were in the Soviet Union in the 20th century, you'd need to be very careful with your answer).

I would think that occasional slight downturns in the economy might not be the worst things in the world. Weed out the weakest players who can't survive, force the next highest tier who are on the fence to become more efficient. Those that are left should be stronger going forward.

It sucks for the "losers", especially in the short-term, but looking at the big picture, it could have an overall positive net effect in the long-term.

Posted by dahsdebater on 12/11/2012 2:55:00 PM (view original):I don't think that's true... Constant economic growth at the rate we had in the '90s is probably unsustainable. Constant growth doesn't have to be.

Unless you've got some bisz-like theory that you can't explain because the rest of us just wouldn't understand, I'd argue that it is. Simply because it has never been sustained.

Well over time the economy has always risen.

So I guess that it is POSSIBLE that we could have small growth forever.

It's not probable, depending on the time frame you're referencing maybe not plausible, but it's not impossible. I do better thinking about things in scientific terms. If you have a box that contains 1000 particles of an atom gas, the total kinetic energy in that box is equal to 1000kT. It's possible, though entirely implausible, that if you sampled that system at the right time there would be one particle with energy of 1000 kT and 999 particles sitting still. On the other hand, there is no possibility whatsoever of ever finding a particle with 1001 kT. That energy just isn't available. But given infinite time, at some point the system would sample the configuration with 1000 kT on one particle.

Similarly, the economy can't possibly sustain growth like what we experienced in the '90s because the natural average rate of technological development simply doesn't allow us to increase per-capita production at a rate commensurate with that level of growth. However, if you took the average rate of increase in production allowed by technological development, that is the theoretical maximum to the rate of economic growth that can be sustained. In reality if you want any hope of promoting an economy that grows as consistently as possible there is a strong argument to be made that you are best off trying to restrain growth to some level no higher than ~50% of that maximum theoretical sustainable growth. At least within a Keynesian framework it should theoretically be possible for the government to help check overly rapid economic growth by slowing the influx of money into the system and increasing taxation. This would allow for storage of funds to help deter future economic declines by re-injection into the economy. Of course, it would take a Herculean effort to stave off an economic backslide following an event like the 9/11 attacks. But certainly we would have been in a better position to experience less recession if we weren't coming off a period of unsustainable and largely unchecked growth. I'm not saying it's plausible to have an economy grow ever year for a century. But an ideally-run economy should be able to have only very minor declines, and hopefully grow upwards of 95 or 96 years out of 100. Obviously what we have now isn't all that close to ideal, and I don't really think anyone knows exactly how to idealize it. But to just dismiss it as impossible doesn't exactly encourage the right kind of efforts. We have done any number of things that were once considered impossible, so if they aren't theoretically impossible I wouldn't rule it out.

Well, you know I didn't read all that but here's why it's not sustainable(simplistic version):

We are a world of takers. When things are going well, we want to grab all we can. Therefore, growth gets out of control. There is an inevitable downtime coming because "out of control" growth cannot be sustained. I'm assuming you suggested a small percentage of growth each year. Perhaps something along the lines of a cost-of-living increase rate. But that's not how the world works.

Posted by MikeT23 on 12/12/2012 9:18:00 AM (view original):Well, you know I didn't read all that but here's why it's not sustainable(simplistic version):

We are a world of takers. When things are going well, we want to grab all we can. Therefore, growth gets out of control. There is an inevitable downtime coming because "out of control" growth cannot be sustained. I'm assuming you suggested a small percentage of growth each year. Perhaps something along the lines of a cost-of-living increase rate. But that's not how the world works.

Which is why I said sustainable economic growth would require government intervention, but that it could conceivably happen within a capitalist system very similar to our own. The mechanism isn't all that complicated. During economic growth the government raises tax rates across the board and builds up a surplus cash reserve. When things start to contract they inject that cash back into the economy. Basically, cut back on road-building, military spending, etc during periods of aggressive economic growth. When the economy tries to naturally shrink, dump that money into the economy by building and maintaining infrastructure and investing in rapid military production (obviously you have to carry on constant R&D, but you can actually build new equipment in waves). Obviously the implementation isn't nearly as simple as this, which is why economic cycles continue to happen. If Keynes was perfect and our current understanding of the economy was flawless we should be able to do it, but even so people wouldn't like it because of the constant fluctuations in tax rates. But I think to at least an extent most people would agree that a much more dynamic tax rate would help to maintain a more steady rate of economic growth.